Thursday, March 13, 2014

Marriage and student loans

The headline of this Acton Institute article implied a problem for the marriages of young people with student loans:

Student Loan Debt is Not Just an Economic Problem, It’s a Marriage Problem

In fact it is about how divorced  parents contribute far less to their offspring's college education (and what the government should do about it.) Coincidentally it reflected a recent conversation I had with a friend. After a marriage break up she had not been able to give her children the sort of financial University support planned pre-divorce. I was explaining (or trying to justify) why we decided to continue to support our oldest rather than expect him to take out a student loan.1/ We can afford to but 2/ more importantly, I don't want to see my children starting out with debt. It can be habit-forming. But it must also influence relationship formation and stability. Which is what I thought the headline referred to.

Anyway back to the Acton piece. It quotes research from Rice University:
 Married parents not only contributed more in absolute terms to their children’s education than divorced parents ($4,700 median amount per year vs. $1,500 per year; p<.001) but also gave a larger proportion of their income to their children’s education (8 percent vs. 6 percent, p<.05). Married parents also outscored remarried parents in absolute ($4,700 per year vs. $2,490; p<.001) and proportional terms (8 percent of income vs. 5 percent; p<.001). Moreover, married parents covered a significantly greater proportion of their children’s financial needs, as defined by the cost of the college in which they are enrolled minus aid. Even as children of divorced and remarried parents were found to have significantly lower levels of financial need, married parents nonetheless covered 77 percent of the financial need of their children, whereas divorced parents covered just 42 percent of the financial need of their children (p<.001) and remarried parents 53 percent (p<.05). Using ordinary least-square regressions to predict parental contributions, the researchers found that parental marital status even trumped parental education and income as the determining factor.
If my theory also holds water, this is yet another example of how marriage breakdowns contribute to overall reduced, probably inter-generational wealth and greater inequality.

1 comment:

Brendan McNeill said...


Thank you for pointing out the finanical benefits to children whose parents are in a stable marriage relationship.

There was a time in our recent history that this would have been considered 'stating the obvious'.

As I wrote recently politicians in the UK and Russia are now promoting marriage as a means of overcoming the problems resulting from solo parenting and family dysfunction.

Can you imagine any of our politicians being so bold?

This is an excellent example of the social-cultural health of a nation impacting upon the economic wellbeing of its citizens of all ages. We cannot pretend that it just doesn't matter.

Furthermore, the human cost to one side for a moment, Governments of all colours socialise the cost of relationship breakdown amongst all tax payers, thereby making it an issue for all of us.